North Loop Deal Sweet For Mayor

Chicago`s city planners have finally kicked a North Loop monkey off their backs.

It happened quietly last week when developers, without fanfare, signed a contract to buy the vacant block at State Street and Wacker Drive once earmarked for a new Hilton hotel.

FOR THE RECORD - Corrections and clarifications (Published April 2, 1986)-- A story and map concerning the city`s sale of land in the North Loop in the Chicagoland section of Monday`s Tribune contained two errors. It stated that no sales contract exists for the partial block north of Lake Street between Dearborn and Clark Streets, when, in fact, a qualified contract was executed in December between the city and developersRichard Stein and Elzie Higginbottom. Also, the map depicting the two blocks being sold to developers incorrectly included the block southeast of the corner of State Street and Wacker Drive. The correct blocks are southwest of that intersection, and are bounded by Wacker Drive and State, Lake and Clark Streets. The Tribune regrets the errors.

Hilton backed out of a deal in 1981, as did another hotel developer in 1983.

But a team of developers led by Jerrold Wexler and John Buck has now agreed to pay $12 million for the property. The newly signed contract of sale was speedily ratified last Wednesday by the Chicago City Council.

The price may sound like a terrific bargain--since the city spent more than $20 million back in 1981 to buy and clear the block for Hilton. But the city always had planned to ``write down`` the cost of the land to developers willing to build something the city wanted.

What the Buck-Wexler group proposes for the site is a 40-story office tower alongside a 600-room luxury hotel, both rising from a base structure of stores, restaurants and cultural attractions.

When completed in 1989, the $250 million complex should produce a $2.5 million increase in real estate taxes. The taxes are key to continued progress in the six-block North Loop project, because the city plans to divert all the growth in real estate taxes for use in financing the purchase and resale of other blocks.

Though the actual transfer of money need not take place until Oct. 1, the administration of Mayor Harold Washington can now savor the State-Wacker deal as a big prize that eluded his predecessor, Jane Byrne. Byrne`s administration failed to complete the deal when one of her many political enemies, Cook County Assessor Thomas Hynes, refused to bless Hilton with a property tax break. That prompted the hotel chain to back out and left the city holding a $20 million bag.

The sale also marks the Washington administration`s first use of minority and female ``set asides`` in a privately financed development and the city`s boldest step yet toward something called ``linked development.``

Under the terms of the contract, the developers have pledged ``good faith`` efforts to:

-- Allot, or set aside, 25 percent of all construction work to minority-owned firms and 5 percent to female-owned firms;

-- Continue using minority- and female-owned firms for at least five years after the project is built, for maintenance, security and other operational services. At least 30 percent of these operational contracts are to go to minorities, 15 percent to women and at least half to city residents; -- Provide 1,200 hours of expertise to neighborhood organizations as a

``linked development`` contribution valued at about $240,000;

-- Offer 20 percent reductions in rent for five years to minority and female shopkeepers approved by the city or else pay the city an extra $250,000.

In addition, the city also is exacting a $1.8 million contribution from Buck-Wexler that it will spend elsewhere in the North Loop.

Elizabeth Hollander, the city`s planning commissioner, said the contribution likely will be used to offset the city`s share of renovating the nearby Chicago Theatre or to develop the alleyway between the Chicago and the landmark Harris Selwyn theaters on Dearborn Street.

Hollander said action also is imminent on two other blocks in the North Loop.

She said developers Richard Stein, John Baird and Elzie Higginbottom are about to sign a $13 million contract to buy the partial block west of the State and Wacker site--land also purchased five years ago for Hilton--where they plan an apartment, retail and office complex.

And the city is actively negotiating with the Levy Organization and Metropolitan Structures for the block east of the Civic Center.

The latter talks have stalled, however, over the future of the landmark McCarthy Building at the northeast corner of Washington and Dearborn Streets. Developers want to raze the McCarthy Building, but the city wants them to build around it or pay to have it moved elsewhere.